Question 1

Collection Fees

Accepted Answer

Collection Fees Q: Our Managing Agents have just advised leaseholders that, as they are no longer allowed to charge credit cards fees to individuals, following 2017 Payment Services Legislation, they will now put all credit card charges onto the service charge under a line named 'Collection Fees', in effect, requiring leaseholders to pay their neighbour's credit card fees. The agents advise that they have taken independent legal advice and that they can do this and call it Collection Fees. We countered that legislation states they are no longer allowed to charge people for paying using credit cards, and that even if they are charged themselves if someone uses a credit card, they cannot charge that cost forward. It is not a collection fee. Do you have anything on this matter? FPRA Committee Member Shaun O’Sullivan replies: It is true that the 2017 Payment Services legislation prevented retailers from applying surcharges for users of credit cards. Nevertheless, your managing agent will still be charged fees by the credit card company for every payment accepted by credit card and these charges form part of the managing agent’s overheads which he is entitled to recover for the services provided via the service charge. It is not at all unusual for lessees who might all be bound by the same level of service charge to benefit unevenly. For example, ground floor lessees will generally contribute to the same degree as upper floor lessees in relation to the maintenance of lifts even though they may never use them. This is one of the many imperfections of leasehold life. The only way to avoid these costs is to petition the freeholder to require the managing agents not to accept any payments by credit card (a situation not at all unusual in many developments). Of course, this is unlikely to find favour among those of your neighbours who have become accustomed to paying in this way. [Submitted April 2019]

Question 2

Collection Fees

Accepted Answer

Collection Fees Q: Our Managing Agents have just advised leaseholders that, as they are no longer allowed to charge credit cards fees to individuals, following 2017 Payment Services Legislation, they will now put all credit card charges onto the service charge under a line named 'Collection Fees', in effect, requiring leaseholders to pay their neighbour's credit card fees. The agents advise that they have taken independent legal advice and that they can do this and call it Collection Fees. We countered that legislation states they are no longer allowed to charge people for paying using credit cards, and that even if they are charged themselves if someone uses a credit card, they cannot charge that cost forward. It is not a collection fee. Do you have anything on this matter? FPRA Committee Member Shaun O’Sullivan replies: It is true that the 2017 Payment Services legislation prevented retailers from applying surcharges for users of credit cards. Nevertheless, your managing agent will still be charged fees by the credit card company for every payment accepted by credit card and these charges form part of the managing agent’s overheads which he is entitled to recover for the services provided via the service charge. It is not at all unusual for lessees who might all be bound by the same level of service charge to benefit unevenly. For example, ground floor lessees will generally contribute to the same degree as upper floor lessees in relation to the maintenance of lifts even though they may never use them. This is one of the many imperfections of leasehold life. The only way to avoid these costs is to petition the freeholder to require the managing agents not to accept any payments by credit card (a situation not at all unusual in many developments). Of course, this is unlikely to find favour among those of your neighbours who have become accustomed to paying in this way. [Submitted April 2019]

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